BB&T Reports 10-Point Gain in Net Interest Margin

Wider margins and expense control boosted quarterly profits at BB&T in Winston-Salem, N.C.

The $212 billion-asset company said Thursday that its first-quarter earnings rose 5% from the fourth quarter and 4% from a year earlier, to $570 million, or 67 cents a share. Year-over-year comparisons were partially skewed by the company's purchase of Susquehanna Bancshares last fall.

"Our strategic acquisitions and organic growth have helped us grow our market share while maintaining low funding costs, and we achieved positive operating leverage from the fourth quarter," Chairman and Chief Executive Kelly King said in a news release.

Net interest income increased 1.7% from the fourth quarter and 16.5% from a year earlier to $1.5 billion. Total loans fell slightly from the fourth quarter but increased 12% from a year earlier, to $136.7 billion. The net interest margin widened by 8 basis points from the fourth quarter and by 10 basis points from a year earlier, to 3.43%.

Noninterest income was flat from the fourth quarter but increased by 2% from a year earlier, to $1 billion. The first-quarter results included $45 million in securities gains. Income tied to insurance and mortgage banking were lower compared to the first quarter of last year.

Noninterest expense fell 3% from the fourth quarter and increased 9% from a year earlier, to $1.5 billion. The biggest decline came in other expenses, which some analysts attributed to lower operating chargeoffs and charitable contributions. BB&T recorded $23 million in merger-related charges.

The loan-loss provision increased 43% from the fourth quarter and 86% from a year earlier, to $184 million. BB&T had already said that it would pad its reserves to cover for issues in the energy sector.

Nonperforming assets increased $191 million during the first quarter, driven by $206 million in energy-related downgrades. BB&T noted that none of the loans were past due on March 31.

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